Stockers Don’t Pencil

[rocfarm]

So it looks like we might have a wet winter here. I decided to run the numbers on buying some more 450Lb heifers, running them through the winter, spring and summer, then selling next fall.

I was conservative on my ADG, calculating about 1.25 to 1.5 lbs. Figured I’d sell the heifers at about 755 lbs. I used the numbers listed on the local cattle auction websites to calculate.

It seems like the spread between the 450 lbs heifers and 750 lbs heifers is not wide enough to make the risk of running them for about 8-9 months on grass.

My guess is that corn and hay are so cheap that they can run them just as efficiently in the feed lots.

Thoughts?

 

[SBMF 2015]

Around here corn and hay is just about worthless. Everyone I know has excess hay supply, some aren’t even baling the last cutting.
The thing that I’m starting to hear going into winter is “I wish cows weren’t so expensive . We’ve got the extra feed but don’t want to buy more cows at these prices “

 

[Dave]

They sure pencil here. The prices here are report in a 100 pound weight range. The average price reported n 400-500 heifers is $415. A 450 pound heifer at $4.15 is $1,862. Did the same method of calculation on the 700-800 pound heifers and came up $3.30 at 750 lbs. That is $2,478. That works out to $611 to put on 300 pounds. Better than $2 a pound to had weight and doing it on grass? That works every day of the week and twice on Sunday. That even pencils here where there is no pasture during the winter.

 

[Rafter S]

I can understand that it might not pay if you're feeding them through the winter. Last spring I bought a few, then let them walk around eating grass until December. That penciled out just fine.

 

[rocfarm]

They sure pencil here. The prices here are report in a 100 pound weight range. The average price reported n 400-500 heifers is $415. A 450 pound heifer at $4.15 is $1,862. Did the same method of calculation on the 700-800 pound heifers and came up $3.30 at 750 lbs. That is $2,478. That works out to $611 to put on 300 pounds. Better than $2 a pound to had weight and doing it on grass? That works every day of the week and twice on Sunday. That even pencils here where there is no pasture during the winter.

Maybe I need to run the numbers again.

 

[rocfarm]

They sure pencil here. The prices here are report in a 100 pound weight range. The average price reported n 400-500 heifers is $415. A 450 pound heifer at $4.15 is $1,862. Did the same method of calculation on the 700-800 pound heifers and came up $3.30 at 750 lbs. That is $2,478. That works out to $611 to put on 300 pounds. Better than $2 a pound to had weight and doing it on grass? That works every day of the week and twice on Sunday. That even pencils here where there is no pasture during the winter.

Average price of 450lbs heifer is 462.5 on my numbers. Starting price is 2081 per head. Bit of a difference.

 

[mwj]

Average price of 450lbs heifer is 462.5 on my numbers. Starting price is 2081 per head. Bit of a difference.

What is the ending price? Show ''your figures'' like Dave did. Profit has nothing to do with the starting price.

 

[farmerjan]

It won't pencil here because we are in drought like conditions. We got .4 rain this past Sunday. Only 1.2 the whole month of August and temps above normal this summer. Grass is drying up in pastures and we are feeding some supplemental hay at the 2 pastures we are calving since there is not enough for them to even pick much anymore...
This is usually part of our "hurricane season" where we often get more rain than we need from storms... It is a quieter than normal year and we are missing alot of the rain that does form and go east of the mountains here.

We sold 13 of the "bottom ", heifers and turned another 14 out; we are considering bringing them back in and selling them also, since we will have spring calves to wean off cows later this fall. 2nd cutting hay is less than half and a couple farmers have said they bush hogged off pastures because of the weed growth, so that if we get some rain the grass might have a chance to come back. 2 that I know of have bush hogged their hayfields to get the dried up tops to fall back to the ground and start to add to the organic matter, before the weedy seedheads matured and added more weed seed to the ground.

A couple weeks ago we sold 440 lb heifers for 4.00... Also sold a 765 lb heifer that was going to be kept for a replacement but kept going over the gate for 3.03.... $1765 vs $2317 so a $550 difference. If we had an abundance of grass, and there was plenty of hay, it would have made sense to keep the smaller heifers for awhile. Now, for us, it is better to sell them smaller.

 

[moses388]

Average price of 450lbs heifer is 462.5 on my numbers. Starting price is 2081 per head. Bit of a difference.

How about other classes of cattle? I'm guessing you figured based on 450lb black beef heifers. What about colored beef heifers? What about dairy heifers?

 

[moses388]

@farmerjan
I am sorry to hear about the difficult choices you are facing. I am finally rid of the drought this year, but thinking about the good females I sold the last few years makes me sad. Those past sales have allowed me to purchase other females. So when things start turning around for you, I hope you find some good buys. Best wishes.

 

[bird dog]

In this area, none of light weight calves really work out well on pasture alone after September. Even with tubs. Hay alone won't work either. Now if you got some wheat or oats going, its a different story.

If you want to go the feeding on pasture route. Wait until a cold day in early February to buy. Then you only have to feed 30 days or so until green up.

 

[kenny thomas]

Average price of 450lbs heifer is 462.5 on my numbers. Starting price is 2081 per head. Bit of a difference.

Where are you seeing 450 heifers average 462.50? I can average them here for 3.80 im pretty sure.

 

[farmerjan]

Where are you seeing 450 heifers average 462.50? I can average them here for 3.80 im pretty sure.

@kenny thomas you might have to buy a trailer load and go to where they are bringing that... making even .50/lb, might make a road trip worth it...

@moses388 , it's part of the farming "game".... and these 14 will not upset me all that much to sell. They were put back out, for a 2nd "look through".... not overly impressed with more than 4 or 5 in that group...... but we took one trailer load to town the last trip... so these got a reprieve... We have kept the best ones the last couple of years and have many more coming up than we used to...Calving out 12 heifers with fall calves, and another 18 got bred for spring, and will get preg checked later this fall....
We sold a few during another real dry spell, a few years ago, and a couple of them, I have always wished we could have kept... but, life goes on. We occasionally buy older cows, some with calves, when there are opportunities... brings in some different genetics sometimes, and have kept some heifers from some of these older cows that greatly improved some of our cattle.

 

[Dave]

I used the report from Producers Livestock Vale OR for their 9/3 sale. They list heifers weighing 400 - 500 the bulk brought $390 to $440. The top for that class was $455. I have no interest in topping the market when buying. The $4.15 I used is the average between 390 and 440. My guess after lots of days sitting at the Vale would be that 90% of these calves would be black Angus. They would include red Angus and Charolais calves in their report. Other lower selling calves would not be included.
Where are they selling for a average of 462.5? What do they top at to make that their average?

 

[Lucky]

You can't figure running stockers on buying 4 weights and selling 7 weights at today's prices. You have to figure buying 4 weights at today's prices and selling 7 weights at the prices 200 days from now.

 

[Dave]

You can't figure running stockers on buying 4 weights and selling 7 weights at today's prices. You have to figure buying 4 weights at today's prices and selling 7 weights at the prices 200 days from now.

True to a point. What will the price be 200 days from now? If anyone has that crystal ball they can make a fortune. Using today's price is a gamble but for a simple comparison on paper it is the closest thing to a valid number. If you were doing this in the real world LRP or a hedge on the futures market would be a sound investment.

 

[Lucky]

Stockers are a gamble, that's why there's forward contracting and LRP. From my limited experience today's prices on 7 weights may be spot on, lower, or higher than the price in 200 days. how lucky are you feeling. You probably won't loose money but you might put in some free labor.

 

[rocfarm]

Ok.

I used Gatesville's online #s. They list #1 450# heifers at 400-525. That's an average of 462.5. They list 700-800 # heifers at 310 to 370, or an average of 340.

Cost is 2081/heifer + 72.5 in feed, transport, vaccinations, etc. no financing costs. End price is 2438.65 after auction fees. Total profit per head is 285.15 if sell at today' averages. A 10% correction in the market and the profit would be 156.80 per head.

Not worth the risk.

I figure @farmerjan is right, about $500 profit per head is what makes it work. Less than 300 is not worth the risk.

 

[kenny thomas]

Ok.

I used Gatesville's online #s. They list #1 450# heifers at 400-525. That's an average of 462.5. They list 700-800 # heifers at 310 to 370, or an average of 340.

Cost is 2081/heifer + 72.5 in feed, transport, vaccinations, etc. no financing costs. End price is 2438.65 after auction fees. Total profit per head is 285.15 if sell at today' averages. A 10% correction in the market and the profit would be 156.80 per head.

Not worth the risk.

I figure @farmerjan is right, about $500 profit per head is what makes it work. Less than 300 is not worth the risk.

A spread of $4.00 to 5.25 dont especially mean an average or 4.6250. There might have been 50 heifers bringing 4.00 and only 1 at 5.25.
But thats way higher than we see here.

 

[Lucky]

It all depends on how many you run. If you buy 10 hd it's not worth it. If you run 1,000 hd thats 156,800.00 for 6 months work. Watching cattle grow isn't a bad gig.